CHICAGO — President-elect Barack Obama announced former rival Hillary Rodham Clinton as his choice for secretary of state Monday and also said he would keep Robert Gates as defense minister as the incoming administration seeks to wind down the U.S. role in Iraq.

Obama also named Washington lawyer Eric Holder as attorney general and Arizona Gov. Janet Napolitano as homeland security secretary. He also announced two senior foreign policy positions outside the Cabinet: campaign foreign policy adviser Susan Rice as U.N. ambassador and retired Marine Gen. James L. Jones as national security adviser.

The announcements rounded out the top tier of the team that will advise the incoming chief executive on foreign and national security issues in an era marked by wars in Iraq and Afghanistan and terrorism around the globe.

"The time has come for a new beginning, a new dawn of American leadership to overcome the challenges of the 21st century," Obama said as his Cabinet picks stood behind him on a flag-draped stage.

"We will strengthen our capacity to defeat our enemies and support our friends. We will renew old alliances and forge new and enduring partnerships."

Obama said his appointees "share my pragmatism about the use of power, and my sense of purpose about America's role as a leader in the world."

Gates' presence in Chicago made him a visible symbol of the transition in power from the Bush administration to one headed by Obama.

The president-elect, reprising a campaign vow, said he would give the military a new mission as soon as he takes office: "Responsibly ending the war in Iraq through a successful transition to Iraqi control."

Video: Introductions
In his announcement remarks, he did not mention his oft-repeated pledge to withdraw most U.S. combat troops within 16 months, although he referred to it in response to a question several moments later.

Clinton, Holder and Napolitano all require confirmation by the Senate.

Jones, as a White House official, does not. Nor does Gates, already confirmed to his post.

Obama also has settled on former Senate Democratic leader Tom Daschle to be his secretary of Health and Human Services and New Mexico Gov. Bill Richardson to be Commerce secretary. Last week, he named key members of his economic team, including Timothy Geithner, president of Federal Reserve Bank of New York, as Treasury secretary.

The decisions mean Obama has half of the 15-member Cabinet assembled less than a month after the election, including the most prominent positions at State, Justice, Treasury and Defense. With the world grappling with war, recession and terrorist threats that erupted this week during coordinated attacks in India, Obama was moving swiftly to try to bring reassurance and continuity in the federal government when he takes over in less than two months.

Concessions by former President ClintonClinton's nomination is the latest chapter in what began as a bitter rivalry for the Democratic presidential nomination.

On Monday, Obama introduced Clinton first, saying of his former presidential rival, "She possesses an extraordinary intelligence and toughness, and a remarkable work ethic. ... She is an American of tremendous stature who will have my complete confidence, who knows many of the world's leaders, who will command respect in every capital, and who will clearly have the ability to advance our interests around the world."

Clinton will give up her seat as a senator from New York to join the Obama Cabinet. Her appointment was preceded by lengthy negotiations involving her husband, the former president, whose international business connections posed potential conflicts of interests.

Obama's new Cabinet?Sen. Clinton had scarcely finished speaking when her husband issued a written statement. "She is the right person for the job of helping to restore America's image abroad, end the war in Iraq, advance peace and increase our security, by building a future for our children with more partners and fewer adversaries, one of shared responsibilities and opportunities," he said.

To make it possible for his wife to become secretary of state, party officials said, former President Bill Clinton agreed to:

Disclose the names of every contributor to his foundation since its inception in 1997 and all contributors going forward.

Speaking at the news conference Monday, Clinton pointed to recent terrorist attacks in Mumbai and elsewhere, saying, "America cannot solve these crises without the world and the world cannot solve them without America."

She said to Obama, "I am proud to join you ... and may God bless you and our great country."

Gesture of goodwill?
Obama's choice of Hillary Clinton was an extraordinary gesture of good will after a year in which the two rivals competed for the Democratic nomination in a long, bitter primary battle.

They clashed repeatedly on foreign affairs. Obama criticized Clinton for her vote to authorize the Iraq war. Clinton said Obama lacked the experience to be president and she chided him for saying he would meet with leaders of nations such as Iran and Cuba without conditions.

The bitterness began melting away in June after Clinton ended her campaign and endorsed Obama. She went on to campaign for him in his general election contest against Republican Sen. John McCain.

Video: A team of rivals?
Advisers said Obama had for several months envisioned Clinton as his top diplomat, and he invited her to Chicago to discuss the job just a week after the Nov. 4 election. The two met privately Nov. 13 in Obama's transition office in downtown Chicago.

Clinton was said to be interested and then to waver, concerned about relinquishing her Senate seat and the political independence it conferred. Those concerns were largely resolved after Obama assured her she would be able to choose a staff and have direct access to him, advisers said.

No leadership prospects in Senate
Remaining in the Senate also may not have been an attractive choice for Clinton. Despite her political celebrity, she is a relatively junior senator without prospects for a leadership position or committee chairmanship anytime soon.

Some Democrats and government insiders have questioned whether Clinton is too independent and politically ambitious to serve Obama as secretary of state. But a senior Obama adviser has said the president-elect had been enthusiastic about naming Clinton to the position from the start, believing she would bring instant stature and credibility to U.S. diplomatic relations and the advantages to her serving far outweigh potential downsides.

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